Hindustan Oil Exploration Co. Ltd

Transcription

1 GICS Industry : Oil, Gas & Consumable Fuels l Sub Industry : Oil & Gas Exploration & Production l Website : Hindustan Oil Exploration Co. Ltd Key Stock Indicators NSE Ticker : HINDOILEXP Bloomberg Ticker : HOE:IN Face value / Share: 1. Div. Yield (%):. CMP (as on 2 Dec 21 Rs/share): week range up to 2 Dec 21 (Rs)(H/L): / Market Cap as on 2 Dec 21 (Rs mn): 26,314 Enterprise Value as on 2 Dec 21 (Rs mn): 32,38 Shares outstanding (mn): 13.5 Free Float (%): 52.8 Average daily volumes (12 months) : 997,883 Beta (2 year) : 1.6 Hindustan Oil Exploration Company Limited (HOEC), incorporated in 1983, was the first private company to foray into oil & gas exploration. The company s major shareholders include Burren Shakti Limited (27%) and Eni UK Holdings Plc (2%). HOEC began operations in 1991, when the government announced bidding for the fourth round of exploration for the private sector. HOEC has five producing assets and six exploration assets. Its producing assets are spread over the Cauvery basin (Block CY-OS-9/1, Block PY-1) and the Cambay basin (Block CB-ON-7, Block Asjol and North Balol field). Of these five, three are oil-producing blocks, while two produce gas. KEY HIGHLIGHTS Natural gas production increased tremendously as PY-1 gas field commenced operations In 29-1, HOEC s natural gas production increased by 34.1 times to.9 MBOE [.4 million standard cubic meters (MMSCMD)] from.3 MBOE [.1 MMSCMD] in 28-9 as production from the PY-1 gas field began in November 29. The gas from this field is supplied to GAIL India Limited. The field also produces condensate, which is supplied to Chennai Petroleum Corporation Limited (CPCL). Other than the PY-1, HOEC has another gas field named North Balol in Cambay basin. Crude oil production declines in FY1 HOEC s aggregate crude oil production has continuously declined over the past few years. In 29-1, oil production declined by 22.2% to.18 million barrels (MBBLS) in 29-1 from.23 MBBLS in The decline in production was due to the shutdown of the PY-3 field for nearly 7 months for repair work and the natural decline faced by the company s other fields. The company has three crude oil producing fields two in the Cambay basin (CB-ON-7 and Asjol) and one in the Cauvery offshore basin (CY-OS-9/1 i.e. PY-3 Field). Moreover, the company s crude oil production is highly concentrated on specific fields. It depends on the PY-3 block for almost 75% of output. Key Financial Indicators Mar-8 Mar-9 Mar-1 Revenue (Rs mn) 1,73.1 1, ,747. EBITDA margins (%) PAT (Rs mn) PAT margins(%) Gearing (x) EPS (Rs/share) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x) n.m. : Not meaningful 28.9 Shareholding (As on September 3, 21) FII 5% DII 1% Others 47% KEY RISKS International crude oil prices and domestic gas prices Successful development of new fields Asset concentration risk Stock Performances vis-à-vis market Returns (%) YTD 1-m 3-m 12-m HINDOILEXP NIFTY Note: 1) YTD returns are since April 1, 21 to Dec 2, 21. 2) 1-m, 3-m and 12-m returns are up to Dec 2, 21. Indexed price chart (index) Promoter 47% (') Dec-9 Jan-1 Feb-1 Mar-1 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Volumes (RHS) HINDOILEXP NIFTY CRISIL COMPANY REPORT 1

2 BACKGROUND HOEC is a player in the hydrocarbon exploration and production business. In 29-1, HOEC s annual oil and gas production was 1.1 million barrels of oil equivalent (MBOE). The company s natural gas production has significantly increased over the past year as production began from its PY-1 field. Thus, the company s production profile has moved towards natural gas over years, as natural gas production increased and crude oil production declined due to the ageing of fields and absence of new crude oil discoveries. In 29-1, of the total production of 1.1 MBOE, natural gas constituted about 82 per cent (.9 MBOE) and oil constituted about 18 per cent (.2 MBOE). COMPETITIVE POSITION Peer Comparison HOEC CAIRN India ONGC OIL Mar-1 Mar-1 Mar-1 Mar-1 Revenue (Rs mn) 1, ,7.4 1,146, ,152.9 EBITDA margins (%) PAT (Rs mn) , , ,14.3 PAT margins(%) Gearing (x) EPS (Rs/share) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x) n.m: Not meaningful FINANCIAL PROFILE Revenues and margins improved on the back of higher volume and lower expense In 29-1, HOEC s operating income increased by 5% year-on-year (y-o-y), as volumes increased 4.1 times y-o-y. Increase in volumes was due to the commencement of natural gas production from the PY-1 gas field despite decline in crude oil production. HOEC s operating profits increased by 163 per cent y-o-y to Rs 1.1 billion due to a reduction in other manufacturing expenses. Operating expenses declined as expense on rig hire charges decreased on the shutdown of the PY-3 field for 7 months. Thus, the operating profit margin of the company rose to 63.4% in 29-1 as against 36.2% in Key Financial Indicators Units Mar-8 Mar-9 Mar-1 Revenue Rs million 1,73.1 1, ,747. EBITDA margins PAT Rs million PAT margins Revenue growth EBITDA growth PAT growth 4, Gearing Times RoCE RoE CRISIL COMPANY REPORT 2

3 INDUSTRY PROFILE Crude Oil Domestic crude oil production rose from 6.8 million tonnes in to 33. million tonnes in , thanks to the new oilfield discoveries from exploration activities in However, since 1987 no new oilfields (except for Cairn India s Rajasthan fields) have been discovered, because of which, domestic production has stagnated at MT till date, which has also led to significant increase in India s dependence on crude oil import. The domestic crude oil demand-supply gap stood at an estimated 147 million tonnes (81 per cent of demand) in Domestic crude oil production sufficed for just 19 per cent of demand at 33.7 million tonnes. The government, through the introduction of New Exploration Licensing Policy (NELP) in , has made some efforts to increase crude oil production in the country by encouraging exploration activity and private sector participation. Subsequently, eight rounds under NELP have been conducted. PSU oil exploration and production companies have to share subsidy burden on petroleum products which caps their profitability in case of rise in crude oil prices. Dated Brent crude oil prices declined from $97.6 per barrel in 28 to $61.9 per barrel in 29 due to slow down in global economies. However, they were significantly above their recent lows of $34 per barrel recorded on 24th December 28. The recovery in global economic growth coupled with increasing dependence on crude oil from the Organization of the Petroleum Exporting Countries (OPEC) has led to rise in crude oil price in from 21 which averaged at $79 per barrel during January-November 21. Oil and gas exploration Domestic crude oil production rose from 6.8 MMT in to 33. million metric tonnes (MMT) in However, since 1987 no new oilfields (except for Cairn India s Rajasthan fields) have been discovered, because of which, domestic production has stagnated at MT till date. NELP was formulated in to encourage exploration activity and private sector participation in order to raise crude oil production in the country. The fiscal terms offered under the NELP rounds are attractive to augment investments - investors have been offered tax holiday for 7 years from the beginning of commercial production of crude oil. Subsequently, eight rounds under NELP have been conducted. A total of 126 discoveries have been made till date, of which 32 pertain to the pre-nelp period and 3 from the small and medium sized fields offered in and the remaining 7 pertain to the NELP blocks. The success of NELP is evident from the increase in the average accretion to in-place reserves, from million metric tonnes (MMT) till to MMT till However, exploration stage is more risky as compared to production stage since there is high probability of misses and the gestation period is also very long. CRISIL COMPANY REPORT 3

4 ANNUAL RESULTS Income Statement Balance sheet (Rs million ) Mar-8 Mar-9 Mar-1 (Rs million ) Mar-8 Mar-9 Mar-1 Net Sales ,557.2 Equity share capital 1,35.1 1,35.1 1,35.1 Operating Income 1,73.1 1, ,747. Reserves and surplus 8, , ,755.1 Tangible net worth 1,38.3 1,6.3 11,6.2 EBITDA ,17.2 Deferred tax liablity: asset EBITDA Margin Long-term debt 1, , Short-term-debt.. 5,697.5 Depreciation Total debt 1, ,34.8 6,524.7 Interest Current liabilities 1,8.1 3, Other Income Total provisions Total liabilities 12, , ,38.3 PBT Gross block 1, , ,865.8 PAT Net fixed assets 4,44. 11, ,73.3 Investments 5, PAT Margin Current assets 2, , ,265.9 Receivables No. of shares (Mn No.) Inventories Cash 1, , Earnings per share (EPS) Total assets 12, , ,38.2 Cash flow Ratio (Rs million ) Mar-8 Mar-9 Mar-1 Mar-8 Mar-9 Mar-1 Pre-tax profit Revenue growth (%) Total tax paid EBITDA growth(%) Depreciation PAT growth(%) 4, Change in working capital ,27.8-2,553.7 EBITDA margins(%) Cash flow from operating activities , ,49.4 Tax rate (%) Capital Expenditure -1, ,17.5-5,892.5 PAT margins (%) Investments and others -5,18.6 5, Dividend payout (%) Cash flow from investing activities -6, , ,84.6 Return on Equity (%) Equity raised/(repaid) 6, Return on capital employed (%) Debt raised/(repaid) ,219.8 Dividend (incl. tax) Gearing (x) Others (incl extraordinaries) Interest coverage (x) Debt/EBITDA (x) Cash flow from financing activities 5, ,248.3 Change in cash position , ,965.7 Asset turnover (x) Opening cash 1, , ,766.8 Current ratio (x) Closing cash 1, , Gross current assets (days) n.m : Not meaningful; QUARTERLY RESULTS Profit and loss account (Rs million) Sep-1 % of Rev Sep-9 % of Rev Jun-1 % of Rev Sep-1 % of Rev Sep-9 % of Rev No of Months Revenue , EBITDA , Interest Depreciation PBT (17.1) (12.9) PAT (17.6) (13.2) CRISIL COMPANY REPORT 4

5 FOCUS CHARTS & TABLES Rs mn 1, Quarterly sales & y-o-y growth Rs mn Quarterly PAT & y-o-y growth 1, Dec-7 Mar-8 Jun-8 Sales Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Sales growth y-o-y (RHS) Dec-7 Mar-8 Jun-8 Net Profit Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Net profit growth y-o-y (RHS) Rs/share 2 EPS 2 Movement in operating and net margins Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 OPM NPM Jun-1 Sep-1 Shareholding Pattern () Dec 29 Mar 21 Jun 21 Sep 21 Promoter FII DII Others Board of s Name R Vasudevan Deepak S Parekh Paolo Carmosino Santo Lagana Sunil Behari Mathur Mukesh Butani Franco Conticini Sergio Adriano Laura Luigi Ciarrocchi Manis h Maheshwari Designation Chairman Managing Jt. MD Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer This report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assume the entire risk of any use made of this data / report. CRISIL especially states that, it has no financial liability whatsoever, to the subscribers / users of this report. This report is for the personal information only of the authorised recipient in India only. This report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report. For information please contact 'Client Servicing' at , or via clientservicing@crisil.com. CRISIL COMPANY REPORT 5